Saturday, May 14, 2016

There are many states in the U.S. who have discovered that a return to a sound money backed by gold may be the only relief for their debt problems that not only threaten local governments, but state-wide pensioners. And while places like Utah, Texas, and Oklahoma have all passed legislation recognizing gold as legal tender, one Southwestern state is rejecting this premise at a time when pensioners are being asked to accept less retirement proceeds due to massive deficits.

Arizona's Republican establishment Governor Doug Ducey just vetoed the second bill to come across his desk, which was seeking to label gold as both money, and recognized legal tender within the state earlier this week. And instead Ducey is focusing on a new measure which would cut the rate of payments to retirees under the state's pension facility since normal investments for the program have been unable to keep up with the amount due individuals paid into the scheme.

There is no cure for zero interest rates (and negative in Europe and Japan). The central banks have created a monster, a Frankenstein that is now ravaging the economy and especially those who depend on fixed income.

It is no longer possible to earn a yield on paper money, without taking undue risk of precisely the sort that retirement funds should not take.

The only antidote to zero yield on paper is a positive yield on gold.

I explained to the legislators that this bill would not fix the problem in itself. It is a necessary but not sufficient step.

I made a different argument to Governor Ducey. Most legislation creates winners and losers. Those who will be hurt by a new law of course lobby against it, and may become enemies of the governor for signing it. This bill created no losers. No one would be hurt by recognizing gold as money. It would have been good for the state, adding jobs, and even tax revenue.

Unpersuaded by either the plight of the pensioners or the prospect of business growth in Arizona, Ducey vetoed gold.

This is his second time to shoot down gold.

I have just two points to make about this. One, let’s stop perpetuating the myth that Republicans—or even pro-business Republicans as Ducey brands himself—are for gold. This is a big reason cited by Democrats for why they are against gold.

Two, Governor Ducey knew he could get away with this veto because few people care. While our monetary system drowns under zero interest and runaway debt, people are worried about the Kardashians and the gender of Bruce-now-Caitlyn Jenner. - Monetary Metals